Can the Caribbean Rebound? The Harsh Economic Outlook for 2025 and the High Cost of Foreign Solutions

As 2025 approaches, the economic forecast for the Caribbean looks bleak. With a projected growth rate of just 2.1%, the region is bracing for one of the slowest recoveries in the world. But what’s the solution? According to Carlos Felipe Jaramillo, the World Bank’s Vice President for Latin America and the Caribbean, it’s time to “tear up the old playbook” and embrace bold, practical reforms.

However, these proposed reforms raise an essential question: At what cost will these changes come? And could they leave the region more vulnerable to foreign influence?

Let’s dive into the numbers, examine the proposals, and assess the risks and opportunities for the Caribbean as it navigates this economic storm.

📉 Understanding the Numbers: Growth vs. Reality

In the 2024–25 fiscal year, Latin America and the Caribbean (LAC) grew by 2.5%, according to a January World Bank report. The same report forecasts another 2.5% average growth for 2025–2026. But here’s the issue: the LAC figures lump together countries like Argentina, Brazil, and the Caribbean nations, skewing the data.

Argentina’s recovery after two years of economic contraction distorts the regional average. When we isolate the Caribbean, the story shifts.

Take Guyana, for example—its booming oil industry is driving a forecasted growth of 4.9% in 2025 and 5.7% in 2026. Remove Guyana, and the regional growth rate still hits 3.8%, slightly above global trends. On the other hand, Jamaica, hit by Hurricane Beryl, is expected to drop to 1.6% growth in 2026. Haiti, burdened by political instability and humanitarian crises, further drags down the regional average.

🌍 The World Bank’s Concerns and Proposals

The Caribbean faces multiple interlocking challenges:

🌪️ Climate Change

The region is vulnerable to shifting ocean currents, increasing droughts, and frequent natural disasters. In the last 30 years, nine Caribbean nations have suffered disasters costing over 50% of their GDP.

⚡ Energy Dependency

Over 90% of the Caribbean’s power is imported, costing the region $444 million annually (2016–2021). Some nations, like St. Lucia and Grenada, pay some of the world’s highest electricity tariffs.

📉 Trade Restrictions and Debt

Post-2016 trade restrictions—especially under the Trump administration—have hurt Caribbean exports to the U.S. Meanwhile, average public debt hit 68% of GDP in 2024. High interest payments drain critical funds from education, health, and infrastructure.

🛠️ The World Bank’s Solutions

Here’s what the World Bank recommends:

1. Strengthen Disaster Preparedness

Partnering with the Inter-American Development Bank, efforts are underway to improve resilience against environmental shocks.

2. Invest in Green Energy

The Caribbean has vast potential in solar, wind, and geothermal energy, being one of the least carbon-intensive regions globally.

3. Improve Tax Systems

Property tax collection in the Caribbean is just 2% of total tax revenue—far below global norms. A more reliable and equitable tax base could provide much-needed funding.

4. Diversify Economies

William Maloney, the World Bank’s chief economist, advocates for diversified exports, nearshoring, and boosting productivity through service and trade innovation.

5. Attract Foreign Investment

The region must attract more foreign direct investment (FDI)—but with caution. Growth should not come at the expense of sovereignty or sustainability.

⚠️ The Hidden Risks of Foreign Investment

FDI has transformed economies like Guyana and Suriname, but overreliance on oil exports poses long-term risks, especially with declining crude prices.

Trinidad and Tobago, another oil-dependent nation, might attract upstream gas capital, but its long-term sustainability hinges on decarbonization.

Moreover, regulatory oversight is lacking. Frequent oil spills threaten ecosystems and tourism, and unregulated expansion could backfire, both environmentally and economically.

🌱 Can the Caribbean Grow Responsibly?

The Caribbean is at a crossroads. Should it rush into foreign-backed solutions, or take the slower but more self-reliant route?

The World Bank’s strategy offers hope, but it also increases exposure to global interests. The Caribbean must balance external support with internal resilience—a difficult but necessary equation.

💬 Your Voice Matters

We want to hear from you:

• Do you believe the World Bank’s proposals are the right move?
• Will foreign investment help or hurt in the long run?
• What is the biggest challenge facing the Caribbean today—climate change, foreign dependence, or rising debt?

Let us know in the comments below!

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